What Are the Types of Mortgages in Quebec? An Overview Based on the Civil Code

Taking on a mortgage is one of the most significant financial decisions a Quebec homeowner will make. While often associated with buying a home, a mortgage in Quebec has a broader legal meaning, governed by the Civil Code of Quebec.

To fully understand your rights and obligations, it’s important to know the different types of mortgages recognized under Quebec law. Here’s a practical overview of the main categories, with concrete examples.

Reference source: OACIQ – Types of Mortgages

1. Conventional vs Legal Mortgage

Under Article 2664 of the Civil Code of Quebec, a mortgage may be:

• Conventional: Created through a contract between a debtor and a creditor.
  Example: A buyer obtains a mortgage loan from a bank to purchase a house.

• Legal: Arises automatically by operation of law, without the need for a contract.
  It may apply to:

  • Government claims for unpaid taxes.

  • Condominium syndicates collecting unpaid condo fees.

2. Movable vs Immovable Mortgage

• Movable Mortgage: Applies to personal property (movables), such as a vehicle, business equipment, or inventory.
  Example: Stock in a retail store.

• Immovable Mortgage: Applies to real property (immovables), such as a house, apartment building, or land.

💡 Most residential mortgages are immovable mortgages.

3. Mortgage With or Without Dispossession

• Without dispossession: The debtor retains possession of the mortgaged property.
  This is the standard scenario for residential mortgages—you live in your home while it serves as collateral for your loan.

• With dispossession (also called a pledge): The property or its title is handed over to the creditor until the debt is repaid.
  More common in commercial settings or for high-value items.

4. Individual vs Universal Mortgage

• Individual Mortgage: Covers one or more specifically identified assets.
  Example: Your home in Saint-Hyacinthe.

• Universal Mortgage: Covers all current and future movable and immovable property.
  This type is only permitted for:

  • Legal entities (e.g., corporations),

  • Trustees,

  • Individuals operating a business.

5. Open vs Closed Mortgage (in the Civil Law sense)

⚠️ Important: Do not confuse these with the open/closed mortgage products offered by banks (e.g., fixed-rate closed mortgage). Here we refer to the legal nature of the mortgage itself, under Quebec civil law.

• Open Mortgage: Takes effect only if the debtor defaults. It can apply to both present and future property.
  Commonly used in commercial contexts.

• Closed Mortgage: Applies immediately to a specific property. It is fixed and cannot be extended to cover other assets.

📌 Example: An open mortgage on a retailer’s inventory allows for ongoing sales and restocking. In contrast, a closed mortgage on a home ties the mortgage to that single property with no flexibility.

Conclusion: Know Before You Sign

In everyday language, the word “mortgage” is often understood as a loan from a bank to buy a house. But in Quebec law, a mortgage is first and foremost a legal security mechanism.

Whether you’re a homeowner, entrepreneur, or investor, it’s essential to:

• Understand the type of mortgage that applies to your situation,

• Know the legal implications and responsibilities,

• Avoid confusion with banking terminology.

👉 Consult a licensed mortgage broker to guide you based on your financial profile and long-term goals.

If this article on the real estate field was useful to you and you have additional questions, do not hesitate to contact Kate Carmichael, your residential real estate broker. Based in Quebec City, she serves the regions of Ste-Foy, Sillery, and Cap-Rouge.

Representing the well-established firm Royal LePage Blanc & Noir, Kate is available to answer all your real estate inquiries. You can reach her by phone at (418)953-1441 or by email at kcarmichael@royallepage.ca. Visit her website for more information at the following address: www.katecarmichael.com.

We invite you to get in touch with Kate Carmichael for any questions or to assist you with your real estate projects in the Quebec City area. Her expertise and knowledge of the market are valuable assets for achieving your real estate aspirations.